Saturday, 2 May 2015

Globo finals

A technology innovator delivering mobile, telecom and e-business software products and services. I have a holding in my growth portfolio (epic code: GBO).

Globo announced their full year results on Thursday 30 April.  Revenues was up 48.8% to €106.4m and approximately 42% on a like-for-like basis.

Operating profit was up by 36.6% to €37.3m and earnings were up 38.2% to €35m.  EPS increased by 27% to €0.094 on an 8.5% increase in the average number of shares, due to the placing of 33.9m shares in October 2013 (incidentally the placing price was 71p).

Free cash flow (FCF) improved again to €7.3m from the €5.2m last year, equivalent to €0.020 per share and yielding just 2.7% on the current 55.5p share price.  Net cash declined from €42.8m to €40.4m, mainly due to the €9.4m acquisition cost of Sourcebits in July 2014.

Return on capital employed for the year was creditable at 32.4%, similar to last year's 32.6%, although the FCF return on capital employed at 6.3% was below their weighted average cost of capital.

Management have stated that they are confident that 2015 will be a year of significant progress.

The risk with Globo remains the same, whether the high level of R&D investment will ever generate sufficient cash to provide a return that comfortably exceeds its cost of capital.  It is also worth noting that accounts receivable have increased by 78%, well above the increase in revenue and that 40% are more than 3 months old, compared to 30% in the previous year.   

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